Saturn Oil & Gas Inc. press release

Saturn Oil & Gas Inc. Continues Strategic Core Area Expansion with Acquisition of 100% Light Oil-Weighted Corex Resources Ltd.

2026-10-19

TSX - Toronto Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · Canada · M&A / Asset Transactions

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Acquisition adds ~7,000 bbl/d(1,5)of 100% light oil production, expanding Saturn's Southeast Saskatchewan core area into Manitoba and increasing our forecast 2026 exit production rate to 54,000 - 56,000 boe/d(1,6)

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Accretive $82.00/bbl(2)netbacks at current strip pricing, contributing to an estimated $192 million of run-rate net operating income (NOI)(2,5)

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Purchase price of $302 million represents 1.6x NOI(2,5)and 82% of PDP NPV10(4)value, aligning with Saturn's blueprint strategy

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Transaction is expected to be immediately accretive to operating netback, adjusted funds flow per share and free funds flow per share, while exit 2027 target leverage metrics remain unchanged at under one times

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Complementary development adds 323 gross (279 net) identified locations(3,7)to Saturn's drilling inventory, with incremental open hole multi-lateral potential not reflected in current reserves value

Calgary, Alberta--(Newsfile Corp. - October 19, 2026) - Saturn Oil & Gas Inc. (TSX: SOIL) (OTCQX: OILSF) ("Saturn" or the "Company"), a light oil-weighted producer focused on unlocking value through the development of assets in Saskatchewan, Alberta and Manitoba, is pleased to announce that we have entered into a definitive arrangement agreement (the "Arrangement Agreement") with Corex Resources Ltd. ("Corex"), a privately held Calgary-based company, pursuant to which Saturn will acquire all of the issued and outstanding shares of Corex by way of a plan of arrangement under the _Business Corporations Act _(Alberta), for total consideration to Corex shareholders of $302 million (the "Acquisition").

The Acquisition consists of approximately 7,000 bbl/d(1,6)of 100% light oil-weighted, high-netback production in Southwest Manitoba ("SW MB"), immediately adjacent to our Southeast Saskatchewan ("SE SK") core area. In addition, the assets offer attractive future development locations, including potential open hole multi-lateral ("OHML") targets identified by the Saturn team that are not reflected in the current reserves booking. Consideration for the Acquisition will be comprised of both cash and equity, including approximately $252 million in cash and the issuance of Saturn common shares (the "Saturn Shares") to Corex shareholders, having a deemed value of $50 million based on the preceding 20-day volume-weighted average price. Saturn Shares issued to the Azimuth Energy Partners funds ("Azimuth"), Corex's majority shareholder, will be subject to a lock-up agreement providing for their staged release in three equal tranches over the 18 months following closing. The Acquisition is expected to close in December 2026 (the "Closing Date"), subject to the satisfaction or waiver of customary closing conditions.

"This Acquisition embodies the Saturn blueprint in action, adding premium oil barrels for only 1.6 times net operating income(2,5)("NOI") and approximately 82% of PDP NPV10(4)value. The high-quality barrels being acquired are generating accretive netbacks of approximately $82.00/bbl(2,5), well above Saturn's current corporate netbacks, and are expected to generate approximately $192 million of NOI(2,5)over the next 12 months at current strip pricing," said John Jeffrey, CEO of Saturn. "Combined with our forecast 10% organic growth this year, the Acquisition positions Saturn for a strong 2027, starting with an increase to our 2026 target exit production to 54,000 to 56,000 boe/d, while our target leverage ratio exiting 2027 remains unchanged at less than one times. We expect to issue our full 2027 capital budget, program and guidance concurrent with, or shortly after, closing of the Acquisition in the first half of December."

Francesco Mele, COO & Partner at Azimuth, commented on the Acquisition, "Given the development success that Saturn has demonstrated, particularly with the advancement of OHML drilling and the application of new technologies in SE SK, including equity as a component of consideration enables Corex shareholders to participate in future upside driven by Saturn's continued strategic execution and oil-weighted asset base that offers attractive, long-term development potential."

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ACQUISITION HIGHLIGHTS

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Core-Up Strategy in Action:Builds on Saturn's established operations and play expertise within our core SE SK and new SW MB areas, where we expect to capture synergies, reduce operating costs and improve margins while advancing development of the Lower Mississippian conventional reservoir. In SE SK, Saturn has realized ongoing development success and a track record of capturing synergistic efficiencies due to our size and scale, which we intend to replicate in SW MB.

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Strong Operating Netbacks:Operating netbacks at current strip prices are estimated at $82.00/bbl(2,5), supported by 100% light oil production and the potential to reduce per unit costs on the acquired assets by approximately $2.85/bbl upon integration.

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Setting Up for a Strong 2027:While the addition of Corex production and inventory during the first half of December is not anticipated to impact our full year 2026 average production guidance of 43,000 to 44,000 boe/d, the Acquisition, along with Saturn's expanded 2026 capital program, positions the Company to exit this year with production of 54,000 to 56,000 boe/d, establishing a strong base for 2027.

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Enhanced Net Debt Reduction:With an estimated $192 million of NOI(2,5)forecast over the next 12 months at current strip prices, the acquired assets are expected to support increased adjusted funds flow(5)("AFF") per share and free funds flow per share(5)in 2027, which will afford Saturn financial flexibility to continue reducing net debt, returning capital to shareholders through share buybacks, and is expected to position the Company to exit 2027 with net debt to adjusted EBITDA(5)of less than one times.

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Expanded Drilling Inventory with OHML Development Potential:Attractive location inventory includes over 323 gross identified locations (279 net)(3,7), including 206 gross (189 net) booked locations(4) within Corex's most recent reserve report. Nearly 30 net unbooked OHML locations(3)have been identified by Saturn in the Lodgepole formation at Virden, plus an estimated 25 net unbooked OHML Spearfish locations(3), representing potential value beyond what is booked in the most recent Corex reserves report.

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Marketing Opportunities to Improve Realized Pricing: With expanded production in SE SK and SW MB, Saturn is positioned to capture synergies in transportation and blending agreements, and we intend to enhance marketing arrangements to achieve premium pricing and maintain clear market access. In addition, the assets' proximity to the Enbridge Mainline and gathering systems improves stability in oil differentials, which can translate into higher pricing.

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Waterflood Expansion Opportunities: Existing waterflood schemes on approximately 14% of forecast 2026 production have the potential to be expanded to further mitigate declines, provide pressure support and enhance Saturn's long-term sustainability.

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Owned Infrastructure:The Acquisition includes owned and operated infrastructure, including underutilized marketing infrastructure, with no apportionment concerns in SW MB, and optimal positioning for pipeline egress. Saturn has also identified meaningful consolidation opportunities to improve efficiencies and streamline costs.

STRATEGIC BENEFITS

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Increased Light Oil Weighting: Adding approximately 7,000 bbl/d(1,6)of 100% light oil volumes increases Saturn's liquids weighting to approximately 86%, while the addition of premium barrels is accretive to our netbacks.

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Expanded Size and Scale: The clean, contiguous and high working interest (~96%) asset base increases our production and reserves, positioning the Company to negotiate stronger marketing arrangements and enhancing our ability to optimize operations. Pro-forma the Acquisition, Saturn is expected to be the second-largest producer in MB.

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Accretive on Key Metrics with No Change to Target Leverage Ratios: The Acquisition is accretive to Saturn on key metrics, including netback per boe, AFF per share and free funds flow per share. With the addition of higher netback volumes plus organic growth from our expanded second-half 2026 capital program, Saturn maintains our target exit 2027 net debt to adjusted EBITDA ratio at under one times.

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Identified Synergies and Lower Operating Costs: Saturn has identified approximately $6 million of estimated annual efficiency synergies. By targeting facility consolidations, streamlining labour, reducing operating costs and improving marketing arrangements, the Company expects to realize a reduction in per-unit costs on the assets of approximately $2.85/bbl.

TRANSACTION DETAILS & ACQUISITION METRICS

Pursuant to the Arrangement Agreement, Saturn will acquire all of the issued and outstanding shares of Corex for aggregate consideration of approximately $302 million. The purchase price represents approximately 1.6x NOI(2,5)and 82% of PDP NPV10(4)value, which aligns with the Saturn blueprint to acquire at less than two times cash flow and below PDP NPV10 value. Consideration will consist of approximately $252 million of cash and Saturn Shares having a deemed value of $50 million. The cash component will be funded by cash on hand plus a draw on Saturn's credit facility, and the Saturn Shares issued to Azimuth will be subject to a lock-up provision providing for their release in three equal tranches over the 18-month period following the Closing Date.

"As Saturn has systematically bought nearly 26 million shares over the past two years at an average price of approximately $3.00 per share, the Acquisition provides an opportunity to capture undervalued assets that contribute to accretive growth, while minimizing dilution due to the significant increase in our equity value year-to-date," said John Jeffrey, CEO. "We remain committed to allocating a portion of our free funds flow to returning capital to shareholders through our ongoing normal course issuer bid."

A summary of the relevant metrics associated with the Acquisition follows:

| Total consideration ($MM) | $302 | | Production (bbl/d)(1,6) | 7,000 | | Oil & liquids weighting (%) | 100% | | Land (net acres) | ~84,000 | | PDP NPV10 ($MM)(4) | ~$370 | | Total proved (1P) NPV10 ($MM)(4) | ~$530 | | Total proved + probable (2P) NPV10 ($MM)(4) | ~$700 | | Identified drilling locations (gross / net)(3,7) | 323 / 279 | | Booked drilling locations (gross / net)(7) | 206 / 189 | | Operating netback ($/bbl)(5) | $82.00 | | Run Rate NOI ($MM)(2,5) | $192 | | Purchase Price as a Multiple of Run Rate NOI (x)(5) | 1.6 |

THE ARRANGEMENT AGREEMENT

In connection with the Arrangement Agreement, certain shareholders of Corex, who collectively hold greater than 72% of the outstanding Corex shares, have entered into support agreements with Saturn and have executed a written resolution approving the Acquisition, exceeding the Acquisition's approval threshold of two-thirds of the outstanding Corex shares. The Arrangement Agreement includes a customary non-solicitation covenant on the part of Corex, subject to a "fiduciary out" provision, and a right in favour of Saturn to match any superior proposal. The Arrangement Agreement also provides for a termination fee of $15 million payable by Corex to Saturn in certain circumstances, including if Corex terminates the Arrangement Agreement to enter into an agreement with respect to a superior proposal, and a reciprocal $15 million fee payable by Saturn to Corex in certain circumstances, including if Saturn fails to fund the consideration payable under the Acquisition.

The board of directors of each of Saturn and Corex has unanimously determined that entering into the Arrangement Agreement is in the best interests of its respective company. The board of directors, after considering the recommendation by a special committee of the Corex board, and after consultation with its financial and legal advisors, has unanimously determined that the Acquisition is in the best interests of Corex and fair to Corex shareholders from a financial point of view, and resolved to recommend that Corex shareholders approve the Acquisition. Completion of the Acquisition is subject to customary closing conditions for a transaction of this nature, including the receipt of all required court, regulatory and stock exchange approvals. Corex will be distributing further information to the Corex shareholders regarding the Acquisition in the near future, including an information document and the written resolution approving the Acquisition, for review and consideration by the Corex shareholders.

A copy of the Arrangement Agreement will be filed under Saturn's profile on SEDAR+ at www.sedarplus.ca.

ADVISORS

McCarthy Tétrault LLP is acting as legal counsel to Saturn in respect of the Acquisition.

NOTES

(1)Assumes development capital of $77.8 million invested in Corex assets over the next 12 months. (2)On a forward 12-month basis from effective date (November 2026 to November 2027), assuming October 13, 2026, strip pricing. (3)Based on Company-prepared internal projections. (4)See reader advisory: Reserves and Future Net Revenue Disclosures (5)See reader advisory: Non-GAAP and Other Financial Measures. (6)See reader advisory: Supplemental Information Regarding Product Types. (7)See reader advisory: Drilling Locations.

ABOUT SATURN

Saturn is a returns-driven Canadian energy company focused on the efficient, responsible and innovative development of high-quality, light oil-weighted assets, supported by an acquisition strategy targeting accretive and complementary opportunities. The Company's portfolio of free-cash-flowing, low-decline operated assets in Saskatchewan, Alberta and Manitoba provides a deep inventory of long-term economic drilling opportunities across multiple zones. With an unwavering commitment to building an entrepreneurial and safety-focused culture, Saturn's goal is to increase per-share reserves, production and cash flow at an attractive return on invested capital. The Company's Shares are listed for trading on the TSX under ticker 'SOIL' and on the OTCQX under the ticker 'OILSF'. Further information and our corporate presentation are available on Saturn's website at www.saturnoil.com.

INVESTOR & MEDIA CONTACTS

John Jeffrey, MBA - Chief Executive Officer Tel: +1 (587) 392-7900 www.saturnoil.com

Cindy Gray, MBA - VP Investor Relations Tel: +1 (587) 392-7900 info@saturnoil.com

READER ADVISORIES

Non-GAAP and Other Financial Measures

Throughout this news release and in other materials disclosed by the Company, Saturn employs certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed under IFRS Accounting Standards, as issued by the International Accounting Standards Board ("IFRS") and therefore may not be comparable to similar measures presented by other entities. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss), cash flow from operating activities, and cash flow used in investing activities, as indicators of Saturn's performance.

The disclosure under the section "Non-GAAP and Other Financial Measures" in our management's discussion and analysis for the year ended December 31, 2025 and three and six months ended June 30, 2026 ("MD&A"), including non-GAAP financial measures and ratios, capital management measures and supplementary financial measures in the Company's financial statements and MD&A are incorporated by reference into this news release.

This news release may use the terms "adjusted EBITDA", "adjusted funds flow", "net debt", "free funds flow", "net debt to annualized adjusted EBITDA" and "net debt to annualized AFF" which are capital management financial measures. See the disclosure under "Capital Management" in our financial statements for the three and six months ended June 30, 2026, for an explanation and composition of these measures, how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures, and, where applicable, a reconciliation of the Company's historical non-GAAP financial measures to the most directly comparable measure calculated in accordance with GAAP for the applicable period then ended.

Adjusted Funds Flow per Share

Adjusted funds flow per share is a non-GAAP ratio used by management to better analyze the Company's performance against prior periods on a more comparable basis. Adjusted funds flow per share is calculated as adjusted funds flow from operations divided by weighted average shares outstanding during the applicable period on a basic or diluted basis.

Free Funds Flow and Free Funds Flow per Share

Saturn uses free funds flow as an indicator of the efficiency and liquidity of its business, measuring its funds after capital investment available to manage debt levels, pursue acquisitions and gauge optionality to pay dividends and/or return capital to shareholders through activities such as share repurchases. Saturn calculates free funds flow as adjusted funds flow in the period less capital expenditures. By removing the impact of current period capital expenditures from adjusted funds flow, management monitors its free funds flow to inform its capital allocation decisions.

Net Operating Expenses

Net operating expense is calculated by deducting processing income primarily generated by processing third party production at processing facilities where the Company has an ownership interest, from operating expenses presented on the statement of income (loss). Where the Company has excess capacity at one of its facilities, it will process third-party volumes to reduce the cost of ownership in the facility. The Company's primary business activities are not that of a midstream entity whose activities are focused on earning processing and other infrastructure-based revenues, and as such third-party processing revenue is netted against operating expenses in the Company's MD&A. This metric is used by management to evaluate the Company's net operating expenses on a unit of production basis. Net operating expense per boe is a non-GAAP financial ratio and is calculated as net operating expense divided by total barrels of oil equivalent produced over a specific period of time. The calculation of the Company's net operating expenses is shown within the "Net Operating Expenses" section of the MD&A.

Operating Netback

The Company's operating netback is determined by deducting royalties, net operating expenses and transportation expenses from petroleum and natural gas sales. The Company's operating netback is used in operational and capital allocation decisions. Presenting operating netback on a per boe basis is a non-GAAP financial ratio and allows management to better analyze performance against prior periods on a per unit of production basis.

Capital Management Measures

National Instrument 52-112 _Non-GAAP and Other Financial Measures Disclosure _defines a capital management measure as a financial measure that: (i) is intended to enable an individual to evaluate an entity's objectives, policies and processes for managing the entity's capital; (ii) is not a component of a line item disclosed in the primary financial statements of the entity; (iii) is disclosed in the notes to the financial statements of the entity; and (iv) is not disclosed in the primary financial statements of the entity. Please refer to note 13 "Capital Management" in Saturn's financial statements as at and for the period ended June 30, 2026, for additional disclosure on: net debt, adjusted EBITDA, AFF and free funds flow, each of which are capital management measures used by the Company in this news release.